In Retreat, Murdoch Drops TV Takeover

Rupert Murdoch, chairman and chief execuive of News Corp., during an interview in his office in New York on Thursday, May 3, 2007. (Photo: James Estrin / The New York Times)

London - In a stunning setback after days of building scandal surrounding its British newspaper operations, Rupert Murdoch’s News Corporation announced on Wednesday that it was withdrawing a $12 billion bid to take over the shares it does not already own in Britain’s main satellite television broadcaster.

The withdrawal from the bid for complete control of British Sky Broadcasting, also known as BSkyB, represented the most severe damage inflicted so far on Mr. Murdoch’s corporate ambitions by the scandal. Only a week ago, Mr. Rupert hoped to contain the damage by shutting down his 168-year-old tabloid, The News of the World, which had admitted to ordering the hacking of the voice mail of Milly Dowler, a 13-year-old girl abducted and murdered in 2002.

Since then, virtually every day has brought dizzying new disclosure and developments, culminating in News Corporation’s announcement on Wednesday.

In a statement, Chase Carey, the company’s deputy chairman, president and chief operating officer, said “We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate.”

As the announcement was made, Prime Minister David Cameron was meeting with Milly Dowler’s parents at 10 Downing Street.

It was unclear whether the move would mute the outcry against Mr. Murdoch’s operations in Britain. Within minutes of News Corporation’s announcement, politicians from the Labour opposition and the Liberal Democrat junior coalition partner said competition authorities should investigate whether to challenge the Murdoch family’s existing 39 per cent stake in BSkyB.

Ofcom, the media regulator, said it would continue its scrutiny of BSkyB’s ownership structure.

Only hours before the announcement, Mr. Cameron had sought to distance himself from Mr. Murdoch and had urged him to drop the bid for BSkyB, reversing his previous support. The announcement came just before Parliament was set to approve a cross-party call for Mr. Murdoch to abandon his long-cherished desire to take full control of the lucrative satellite broadcaster — a deal regarded as the cornerstone of his strategy for corporate expansion.

Mr. Cameron said Murdoch executives should “stop the business of mergers and get on with cleaning the stables.”

The scandal has also convulsed British politics, the press and the police, forcing them to contemplate unheard of scrutiny of their sometimes incestuous ties. A criminal investigation and a public inquiry have been spawned as a direct result of allegations that journalists from Murdoch newspapers may have tried to hack the phones of families of soldiers killed in Iraq and Afghanistan and made illicit payments to corrupt police officers.

But given Mr. Murdoch’s towering influence in British public life, the scandal has also cast unusually sharp light on a world of cozy relationships between political and corporate leaders and senior police officers.

On Wednesday, Mr. Cameron offered details for the first time of a broad inquiry into those relationships to be led by a senior judge, Lord Justice Brian Leveson. Mr. Cameron told Parliament that it would have the power to summon witnesses to testify under oath. The announcement came as Mr. Cameron fought to recover the initiative in a scandal that has turned into potentially the most damaging crisis of his time in office, partly because of his own close relationship with senior figures in Mr. Murdoch’s British subsidiary.

He said the inquiry would examine the ethics and culture of the British media as well as the accusations of phone hacking at The News of the World, and would also investigate why an initial police inquiry failed to uncover the extent of the scandal. It will also explore allegations that journalists paid corrupt police officers.

Lord Leveson said in a statement that parts of his investigation would begin soon.

Mr. Cameron said he wanted the inquiry to be “as robust as possible, one that can get to the truth fastest and get to work the quickest, and one that commands the full confidence of the public.”

Mr. Cameron said it should complete a report on the future regulation of the press within a year, but he acknowledged that inquiries into allegations of criminal wrongdoing — which the police are also investigating — would take longer.

The opposition Labour leader, Ed Miliband, said the withdrawal of the BSkyB bid was “a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal” and the failure of News International over the years to take responsibility. “The country wanted this. It wanted its voice to be heard. Today, it has been.”

On Wednesday, Mr. Cameron offered details for the first time of a broad inquiry into those relationships to be led by a senior judge, Lord Justice Brian Leveson. Mr. Cameron told Parliament that it would have the power to summon witnesses to testify under oath. The announcement came as Mr. Cameron fought to recover the initiative in a scandal that has turned into potentially the most damaging crisis of his time in office, partly because of his own close relationship with senior figures in News International.

He said that the inquiry would examine the ethics and culture of the British media as well as the accusations of phone hacking at The News of the World, and that it would also investigate why an initial police inquiry failed to uncover the extent of the scandal. It will also explore allegations that journalists paid corrupt police officers.

The senior judge said in a statement that parts of his investigation would begin soon.

Mr. Cameron said he wanted the inquiry to be “as robust as possible, one that can get to the truth fastest and get to work the quickest, and one that commands the full confidence of the public.”

Mr. Cameron said it should complete a report on the future regulation of the press within a year, but he acknowledged that inquiries into allegations of criminal wrongdoing — which the police are also investigating — would take longer.

The opposition Labour leader, Ed Miliband, said the withdrawal of the BSkyB bid was “a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal” and the failure of News International over the years to take responsibility. “The country wanted this. It wanted its voice to be heard. Today, it has been.”

“People thought it was beyond belief that Mr. Murdoch could continue with his takeover after these revelations,” he said in a statement carried by the Press Association news agency. “It is these people who won this victory. They told Mr. Murdoch: ‘This far and no further.’ ”

Nick Clegg, the leader of the Liberal Democrats, who is also the deputy prime minister and nominal ally of Mr. Cameron, also praised the News Corporation’s decision. “This is the decent and sensible thing to do. Now that the bid has been called off and a proper inquiry set up, we have a once-in-a-generation chance to clean up the murky underworld and the corrupted relationship between the police, politics and the press.”

In a rancorous session at the weekly encounter in Parliament known as prime minister’s questions, Mr. Cameron also came under renewed pressure from Mr. Miliband to explain his relationship with his former director of communications, Andy Coulson, a former editor of The News of the World who was taken in for questioning last week on suspicion of conspiracy in the phone hacking and making payments to police officers to gain confidential information.

The debate in Parliament was also marked with sharp exchanges between Mr. Cameron and Mr. Miliband. “He just doesn’t get it,” Mr. Miliband said, referring to the worries provoked by Mr. Cameron’s decision to hire Mr. Coulson, who was forced to resign in January as the phone hacking scandal gathered pace. Mr. Miliband said Mr. Cameron’s hiring of Mr. Coulson revealed a “catastrophic” lack of judgment.

But Mr. Cameron replied, “The person who is now not getting it is the leader of the opposition.” He added, “What the public wants us to do is to deal with this firestorm.”

During the parliamentary debate, a lawmaker also asked if there was evidence that journalists at News International had tried to hack into the voice mail of victims of the Sept. 11, 2001, attacks in the United States, as they are accused of doing in Britain after the London subway and bus bombings in July 2005.

The Daily Mirror newspaper had reported that journalists had sought to secure phone data concerning Sept. 11 victims from a private investigator in the United States. Mr. Cameron said he would investigate the issue.

Neither the e withdrawal of the BSkyB bid nor the shuttering of The News of the World seems to have diverted the fury of lawmakers sensing that, for the first time in decades, Mr. Murdoch and his family are vulnerable.

A spokesman for the House of Commons said that a parliamentary motion censuring Mr. Murdoch — “This house believes that this is in the public interest for Rupert Murdoch and News Corporation to withdraw their bid for BSkyB” — would still be debated later on Wednesday. But it was not immediately clear whether members would vote on it.

David Winnick, a Labour member of parliament who has been investigating the phone hacking case as part of the Home Affairs Committee, said in an interview that Mr. Murdoch had “anticipated what the result would be — a unanimous vote in the House of Commons against him, 650 members deciding it was not in the public interest. He’s used his senses and come to the only possible conclusion.”

He added that Mr. Murdoch had headed off a demonstration of “political hostility which would have been shared in the country,” but warned that “the heat is not off, bearing in mind the criminality that has started to be exposed.”

A parliamentary committee said Tuesday that it would call Mr. Murdoch, his son James and Rebekah Brooks, the chief executive of News International, to testify next week about accusations of phone hacking and corruption at the News International papers. John Whittingdale, chairman of Parliament’s Culture, Media and Sport Committee, said it would seek to determine “how high up the chain” knowledge of the newsroom malpractices in the Murdoch newspapers went.

John F. Burns reported from London, and Alan Cowell from Paris. Reporting was contributed by Ravi Somaiya and Julia Werdigier from London.

In Retreat, Murdoch Drops TV Takeover

Rupert Murdoch, chairman and chief execuive of News Corp., during an interview in his office in New York on Thursday, May 3, 2007. (Photo: James Estrin / The New York Times)

London - In a stunning setback after days of building scandal surrounding its British newspaper operations, Rupert Murdoch’s News Corporation announced on Wednesday that it was withdrawing a $12 billion bid to take over the shares it does not already own in Britain’s main satellite television broadcaster.

The withdrawal from the bid for complete control of British Sky Broadcasting, also known as BSkyB, represented the most severe damage inflicted so far on Mr. Murdoch’s corporate ambitions by the scandal. Only a week ago, Mr. Rupert hoped to contain the damage by shutting down his 168-year-old tabloid, The News of the World, which had admitted to ordering the hacking of the voice mail of Milly Dowler, a 13-year-old girl abducted and murdered in 2002.

Since then, virtually every day has brought dizzying new disclosure and developments, culminating in News Corporation’s announcement on Wednesday.

In a statement, Chase Carey, the company’s deputy chairman, president and chief operating officer, said “We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate.”

As the announcement was made, Prime Minister David Cameron was meeting with Milly Dowler’s parents at 10 Downing Street.

It was unclear whether the move would mute the outcry against Mr. Murdoch’s operations in Britain. Within minutes of News Corporation’s announcement, politicians from the Labour opposition and the Liberal Democrat junior coalition partner said competition authorities should investigate whether to challenge the Murdoch family’s existing 39 per cent stake in BSkyB.

Ofcom, the media regulator, said it would continue its scrutiny of BSkyB’s ownership structure.

Only hours before the announcement, Mr. Cameron had sought to distance himself from Mr. Murdoch and had urged him to drop the bid for BSkyB, reversing his previous support. The announcement came just before Parliament was set to approve a cross-party call for Mr. Murdoch to abandon his long-cherished desire to take full control of the lucrative satellite broadcaster — a deal regarded as the cornerstone of his strategy for corporate expansion.

Mr. Cameron said Murdoch executives should “stop the business of mergers and get on with cleaning the stables.”

The scandal has also convulsed British politics, the press and the police, forcing them to contemplate unheard of scrutiny of their sometimes incestuous ties. A criminal investigation and a public inquiry have been spawned as a direct result of allegations that journalists from Murdoch newspapers may have tried to hack the phones of families of soldiers killed in Iraq and Afghanistan and made illicit payments to corrupt police officers.

But given Mr. Murdoch’s towering influence in British public life, the scandal has also cast unusually sharp light on a world of cozy relationships between political and corporate leaders and senior police officers.

On Wednesday, Mr. Cameron offered details for the first time of a broad inquiry into those relationships to be led by a senior judge, Lord Justice Brian Leveson. Mr. Cameron told Parliament that it would have the power to summon witnesses to testify under oath. The announcement came as Mr. Cameron fought to recover the initiative in a scandal that has turned into potentially the most damaging crisis of his time in office, partly because of his own close relationship with senior figures in Mr. Murdoch’s British subsidiary.

He said the inquiry would examine the ethics and culture of the British media as well as the accusations of phone hacking at The News of the World, and would also investigate why an initial police inquiry failed to uncover the extent of the scandal. It will also explore allegations that journalists paid corrupt police officers.

Lord Leveson said in a statement that parts of his investigation would begin soon.

Mr. Cameron said he wanted the inquiry to be “as robust as possible, one that can get to the truth fastest and get to work the quickest, and one that commands the full confidence of the public.”

Mr. Cameron said it should complete a report on the future regulation of the press within a year, but he acknowledged that inquiries into allegations of criminal wrongdoing — which the police are also investigating — would take longer.

The opposition Labour leader, Ed Miliband, said the withdrawal of the BSkyB bid was “a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal” and the failure of News International over the years to take responsibility. “The country wanted this. It wanted its voice to be heard. Today, it has been.”

On Wednesday, Mr. Cameron offered details for the first time of a broad inquiry into those relationships to be led by a senior judge, Lord Justice Brian Leveson. Mr. Cameron told Parliament that it would have the power to summon witnesses to testify under oath. The announcement came as Mr. Cameron fought to recover the initiative in a scandal that has turned into potentially the most damaging crisis of his time in office, partly because of his own close relationship with senior figures in News International.

He said that the inquiry would examine the ethics and culture of the British media as well as the accusations of phone hacking at The News of the World, and that it would also investigate why an initial police inquiry failed to uncover the extent of the scandal. It will also explore allegations that journalists paid corrupt police officers.

The senior judge said in a statement that parts of his investigation would begin soon.

Mr. Cameron said he wanted the inquiry to be “as robust as possible, one that can get to the truth fastest and get to work the quickest, and one that commands the full confidence of the public.”

Mr. Cameron said it should complete a report on the future regulation of the press within a year, but he acknowledged that inquiries into allegations of criminal wrongdoing — which the police are also investigating — would take longer.

The opposition Labour leader, Ed Miliband, said the withdrawal of the BSkyB bid was “a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal” and the failure of News International over the years to take responsibility. “The country wanted this. It wanted its voice to be heard. Today, it has been.”

“People thought it was beyond belief that Mr. Murdoch could continue with his takeover after these revelations,” he said in a statement carried by the Press Association news agency. “It is these people who won this victory. They told Mr. Murdoch: ‘This far and no further.’ ”

Nick Clegg, the leader of the Liberal Democrats, who is also the deputy prime minister and nominal ally of Mr. Cameron, also praised the News Corporation’s decision. “This is the decent and sensible thing to do. Now that the bid has been called off and a proper inquiry set up, we have a once-in-a-generation chance to clean up the murky underworld and the corrupted relationship between the police, politics and the press.”

In a rancorous session at the weekly encounter in Parliament known as prime minister’s questions, Mr. Cameron also came under renewed pressure from Mr. Miliband to explain his relationship with his former director of communications, Andy Coulson, a former editor of The News of the World who was taken in for questioning last week on suspicion of conspiracy in the phone hacking and making payments to police officers to gain confidential information.

The debate in Parliament was also marked with sharp exchanges between Mr. Cameron and Mr. Miliband. “He just doesn’t get it,” Mr. Miliband said, referring to the worries provoked by Mr. Cameron’s decision to hire Mr. Coulson, who was forced to resign in January as the phone hacking scandal gathered pace. Mr. Miliband said Mr. Cameron’s hiring of Mr. Coulson revealed a “catastrophic” lack of judgment.

But Mr. Cameron replied, “The person who is now not getting it is the leader of the opposition.” He added, “What the public wants us to do is to deal with this firestorm.”

During the parliamentary debate, a lawmaker also asked if there was evidence that journalists at News International had tried to hack into the voice mail of victims of the Sept. 11, 2001, attacks in the United States, as they are accused of doing in Britain after the London subway and bus bombings in July 2005.

The Daily Mirror newspaper had reported that journalists had sought to secure phone data concerning Sept. 11 victims from a private investigator in the United States. Mr. Cameron said he would investigate the issue.

Neither the e withdrawal of the BSkyB bid nor the shuttering of The News of the World seems to have diverted the fury of lawmakers sensing that, for the first time in decades, Mr. Murdoch and his family are vulnerable.

A spokesman for the House of Commons said that a parliamentary motion censuring Mr. Murdoch — “This house believes that this is in the public interest for Rupert Murdoch and News Corporation to withdraw their bid for BSkyB” — would still be debated later on Wednesday. But it was not immediately clear whether members would vote on it.

David Winnick, a Labour member of parliament who has been investigating the phone hacking case as part of the Home Affairs Committee, said in an interview that Mr. Murdoch had “anticipated what the result would be — a unanimous vote in the House of Commons against him, 650 members deciding it was not in the public interest. He’s used his senses and come to the only possible conclusion.”

He added that Mr. Murdoch had headed off a demonstration of “political hostility which would have been shared in the country,” but warned that “the heat is not off, bearing in mind the criminality that has started to be exposed.”

A parliamentary committee said Tuesday that it would call Mr. Murdoch, his son James and Rebekah Brooks, the chief executive of News International, to testify next week about accusations of phone hacking and corruption at the News International papers. John Whittingdale, chairman of Parliament’s Culture, Media and Sport Committee, said it would seek to determine “how high up the chain” knowledge of the newsroom malpractices in the Murdoch newspapers went.

John F. Burns reported from London, and Alan Cowell from Paris. Reporting was contributed by Ravi Somaiya and Julia Werdigier from London.